With the recent uptick in this pandemic known as COVID-19, people are beginning to worry about the possibility of a major financial crisis.
Businesses are being forced to close their doors, leaving millions of people out of work indefinitely.
Now those people are being left to wonder what they should be doing to prepare for the financial emergency that may or may not come. What steps can they take to give them the best chance of getting through this unharmed?
Here are several things that you should do in order to prepare for this situation. Be sure to consider all of these options as you make a plan.
Yes, this is a situation that no one in the world was prepared for, but having a negative outlook on it won’t help the situation.
Try as hard as you can to see the positives in the situation that you’ve been given. Sure, the quarantine means you aren’t currently working, but it also means you get to spend quality time with your family that you otherwise wouldn’t get to.
The other steps below are going to help you and your family get out of this financial emergency as unscathed as possible, but only you can control your mindset.
Like anything else in life, when you’re thrown an obstacle, you should embrace the adversity, knowing that one day you’ll look back at this experience as a teaching moment.
Set a Budget
So… you’ve only got a limited amount of money to live on until this pandemic blows over and you can find a new job.
That means you have two choices: 1) set a budget for the amount that you expect to have this month or 2) don’t budget and spend it all within the first few weeks.
Start by listing out all of the bills that you’ll have to pay such as rent, electricity, phone bill, car bills, car insurance, etc.
Next, set a budget for things such as groceries, entertainment, gas for the car, or anything else that comes to mind. Things such as gas for the car probably won’t need much if you’re quarantined right now.
Make sure that you’re accounting for every single dollar. Every cent of the monthly amount that you have should have a purpose assigned to it.
Don’t Dip Into Your Super Unless You Really Have to
Many people out there have been putting savings towards superannuation to save up for their future
Those same people might be tempted to take out the money that they have on it, regardless of the penalty for doing so.
They want to do this for one of two reasons. They either freak out when they see the total drop so significantly and don’t want it to sink any lower or they think it’s a good backup plan for their current lack of money.
However, withdrawing money from your super right now is one of the worst things that you can do. Eventually, the economy will get back on track through all of this and your superannuation amount will climb back up.
So, for now, act as if those accounts don’t even exist. Don’t check them, don’t touch them, and definitely don’t withdraw from them unless you really need to.
Continue Paying off Debt
One of the biggest mistakes that many people will make during this time will be not paying off the debt that they have.
They almost use this financial emergency as an excuse to not pay the debts they have and spend an unnecessary amount on food that will go to waste.
You should be more resilient than that. Don’t conform to the poor decisions that everyone else is making.
Continue to pay off the debt that you have so that you can complete your pay off of them that much faster. That way, you can protect your credit score and not feel guilty once the economy comes back to normalcy.
Granted, you should pay off your debt within reason. If there’s only a certain amount that you can pay off, then do what you can. But don’t put yourself in a situation where you spend more on paying off debt than you do to survive these harsh times.
Cut Out the Fat of Your Expenses
This is a time where you should be removing any and all monthly bills that aren’t necessary to have right now.
As painful as it may be, that means cutting off your Amazon Prime, Netflix, Apple Music, or any other service that you might have.
If you’re coming up several dollars short in the monthly budget that you’ve created, those must be the first things to go. Don’t lessen your weekly grocery money just to keep Netflix going for one more month.
Shop for Lower Insurance Rates
Have you been considering shopping for lower insurance rates for a while, but just haven’t gotten around to it?
If so, there’s no better time than right now for you to be doing so. Try to find offers that contain the same amount of coverage as your current provider, but at a lesser premium.
If you can’t find any that fit the bill, then just hold on to the current coverage that you have. Whatever you do, never drop your coverage. That can make things worse if you get into an accident.
Prepare for a Financial Emergency with These Tips
Now that you’ve seen several ways to prepare for and endure a financial emergency, it’s time to put those tips into action.
Whatever you do, don’t panic. Don’t take any drastic steps that could harm you or your family down the line.
Be sure to check back to our website often for more tips and guidance on financial advice during these times.
You can find out more about the Government’s stimulus package means you, here.